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Katz Group to appear before city council. What does it mean for arena deal?http://blogs.edmontonjournal.com/2012/12/10/katz-group-to-appear-before-city-council-what-does-it-mean-for-arena-deal/
http://blogs.edmontonjournal.com/2012/12/10/katz-group-to-appear-before-city-council-what-does-it-mean-for-arena-deal/#commentsMon, 10 Dec 2012 22:23:41 +0000http://blogs.edmontonjournal.com/?p=141305Mediation and acceptance of the New York framework needed for deal to proceed on downtown arena

In a careful and contrite-sounding statement, John Karvellas, executive vice-president of the Katz Group, has said his company will request to speak before city …

]]>Mediation and acceptance of the New York framework needed for deal to proceed on downtown arena

In a careful and contrite-sounding statement, John Karvellas, executive vice-president of the Katz Group, has said his company will request to speak before city council on Wednesday, when council is to get an arena update.

“We are not invited,” Karvellas said in an interview. “We don’t have a right to say anything. They have to resolve to permit us to say something. The arena is a topic on the agenda on Wednesday and we’re requested an opportunity to speak to that item on the agenda. But it will be up to city council on Wednesday morning to determine whether they give us that opportunity.”

What does all this mean?

1. I appreciate Karvellas’s tone here. He’s not demanding a meeting. He’s asking for one. He’s going through proper channels. He’s respecting the processes of council. His tone is a small thing, but it is crucial.

The Katz Group failed to respect how difficult it was for councillors to build support for the arena deal this past year. Instead — when a framework was already in place, and when the public had only grudgingly accepted the deal after much difficult debate — it tried to rework the agreement to its own great advantage.

Many Edmontonians want a new downtown arena, but not at any price. They are ready to back a fair deal — the one that had been debated in public for more than a year — but they are not ready to cave in and agree to a massive and costly number of sweeteners for the Katz Group.

2. It is in the Katz Group’s interest to move on the arena deal and to move fast. The majority of council support the deal on the table, but that deal won’t be there forever. Already some councillors are up in arms about spending tens of millions on the Wintergarden pedway, a pedestrian link from the arena across busy 104th Ave.

I think the pedway is a useful piece of public infrastructure. It bridges the chasm of 104th, which has always divided downtown proper from the north edge of downtown. But if it’s going to cost anything more, I can’t see councillors agreeing to pay for it. And if this deal doesn’t happen pronto, I can see council moving ahead on its own arena plan, without the pedway.

3. It’s not known if the public-shy Katz will appear. I’ve heard Karvellas and Oilers president Patrick LaForge will present to council. Of course, it’s best if Katz himself shows up. Right now, councillors don’t know what to believe from the Katz Group, given its late-late-late-in-the-game request for a $6 million per year subsidy and other sweeteners to proceed with the arena deal.

If a deal is to be forged, the city needs to negotiate with Katz himself, so that there can be more confidence that once something is agreed to, it’s going to stick. So he may not show tomorrow, but he’s got to show at the bargaining table.

4. The Katz Group needs to stop making new demands, but stick to the agreement that is on the table. Perhaps there’s some wiggle room in that agreement, but it’s not much, and there will only be wiggling if the Katz Group can actually prove that any changes are either vitally necessary and/or beneficial to the public. They will need to make a fact-based arguments about their own finances and the finances of the NHL, putting out a clear and open business case to council and the public.

5. These negotiations have gone nowhere fast. It’s clear that the two sides need help to forge a final agreement. The Katz Group and city council need to agree to have a mediator help craft the final agreement.

At the same time, Katz likely needs NHL commissioner Gary Bettman at his side of the table, to help keep things on track, as Bettman greatly helped keep things on track in New York last fall, when Mayor Mandel and Katz first forged their agreement framework.

There’s a deal still to be had on a downtown arena. It’s the deal that many councillors fought hard to forge. It’s the deal that many in the public back. It’s the deal Katz needs to get behind now, even as he failed to do so more than a month ago, squandering his best opportunity to make this project go.

It’s a good sign that he and his people are now making this request to appear before council.

But they have now got to agree to the right things for any real progress to be made.

]]>http://blogs.edmontonjournal.com/2012/12/10/katz-group-to-appear-before-city-council-what-does-it-mean-for-arena-deal/feed/0oildropdavidstaplesedmonton460cultofhockey_blog_bannerDowntown arena update: Katz Group requests to appear before Edmonton city council on Wednesdayhttp://blogs.edmontonjournal.com/2012/12/10/downtown-arena-update-katz-group-requests-to-appear-before-edmonton-city-council-on-wednesday/
http://blogs.edmontonjournal.com/2012/12/10/downtown-arena-update-katz-group-requests-to-appear-before-edmonton-city-council-on-wednesday/#commentsMon, 10 Dec 2012 20:44:34 +0000http://blogs.edmontonjournal.com/?p=141286Karvellas: “We’ve requested an opportunity to speak to that item on the agenda.”

Katz Group officials will come to city hall on Wednesday to ask to make a presentation on the downtown arena project, says Katz Group executive vice president …

]]>Karvellas: “We’ve requested an opportunity to speak to that item on the agenda.”

Katz Group officials will come to city hall on Wednesday to ask to make a presentation on the downtown arena project, says Katz Group executive vice president John Karvellas.

Karvellas made it clear that city council will decide whether or not the Katz Group will get a chance to speak.

“We are not invited,” he said. “We don’t have a right to say anything. They have to resolve to permit us to say something. The arena is a topic on the agenda on Wednesday and we’ve requested an opportunity to speak to that item on the agenda. But it will be up to city council on Wednesday morning to determine whether they give us that opportunity.”

Karvellas had no other comment. “Anything more, I think, I would want to say to the councillors first.”

Councillors are scheduled to have their first update on the arena Wednesday since they voted unanimously to end negotiations with Katz in mid-October.

They were outraged the team wanted better terms, including a $6-million annual subsidy, than were provided in a framework agreement reached in 2011.

The verbal update will outline options for proceeding on the project.

The Katz Group’s hope to appear for council is a major turn-around.

On Oct. 16, before council voted to stop negotiating with the Katz Group, Katz had refused to appear before city council. At that time he said while he thought the two sides had made considerable progress in their talks, they were actually going backward, and there wasn’t even agreement on basic assumptions about arena finances. “I fear the city has approached this negotiation based on narrow political considerations rather than a genuine desire to strike a deal that is fair and makes economic sense for both sides.”

On Oct. 17, with Katz or his officials a no-show at council, frustrated city councillors shut down arena talks and said council would consider its options that included building the project alone.

“It’s wrong to hold us up for ransom,” Mayor Stephen Mandel said.

There has been nothing to justify Katz’s demand for a $6-million annual subsidy to offset operating costs at a downtown arena, which city staff identified as the major stumbling block to completing a deal, Mandel said. “The deal we offer to Mr. Katz was incredibly profitable,” he told reporters. “I know the numbers and I can tell you he wasn’t going to lose money.”

Mandel supported a unanimous motion to immediately cease negotiations over jointly building what is now a $475-million facility and look at other ideas, including refurbishing Rexall Place or having the city put up a new arena by itself. “I don’t know what we do. We have been negotiating and our administration has been working incredibly hard for years, and I don’t believe we’re much further ahead than we were four years ago.”

Katz probably has until March 2013 to reach an arena deal with the city before it becomes a “full-blown election issue,” Coun. Bryan Anderson warned last week in an interview with the Journal’s Gordon Kent.

Anderson said he thinks the council chosen next October could have fewer backers for the project than the current group, and a majority might even oppose it. “If anybody on that (Katz) side of the table is waiting for a new mayor or new council, they’re probably sadly mistaken,” Anderson said, explaining votes have generally been 10-3 in favour of proceeding. “I think this is the most sympathetic mayor and sympathetic council that an NHL team could have … I’m not sure you’re going to get that kind of support on a new council.

“I would hope that there’s still time for something to happen before this becomes a full-blown election issue, probably no later than March,” he said, explaining this will require a “major course change” from Katz.

“Am I terribly hopeful that’s going to occur? Probably not, but I am hopeful … I think he believed he was going to get compliance from us all along. I think our last motion indicated how far we want to go.”

]]>http://blogs.edmontonjournal.com/2012/12/10/downtown-arena-update-katz-group-requests-to-appear-before-edmonton-city-council-on-wednesday/feed/0publicarena-rinkdavidstaplesedmontonKatz Group issues statement on downtown arena projecthttp://blogs.edmontonjournal.com/2011/09/29/katz-groups-issues-statements-on-downtown-arena-project/
http://blogs.edmontonjournal.com/2011/09/29/katz-groups-issues-statements-on-downtown-arena-project/#commentsThu, 29 Sep 2011 18:08:45 +0000http://blogs.edmontonjournal.com/?p=90159For the Record: Here is the full text of the Katz Group’s statement on the downtown arena, dated 9/29/2011:

The Katz Group today released the following statement from John Karvellas, Executive Vice President and General Counsel:

We appreciate the time …

]]>For the Record: Here is the full text of the Katz Group’s statement on the downtown arena, dated 9/29/2011:

The Katz Group today released the following statement from John Karvellas, Executive Vice President and General Counsel:

We appreciate the time and effort City Council and City Administration have devoted to the proposed downtown arena project, and want to offer some context on a number of points that have been the subject of recent discussion. It is important for Edmontonians to understand why we have set a deadline of October 31, 2011 to have a firm agreement with the City.

The expiry of our purchase rights on the downtown land is one important factor, but it is not the only one. The Oilers’ lease at Rexall Place expires in less than 33 months, and we are already well past the point of being able to have a new arena in place when the Oilers’ 2014 season opens. Soon we will lose the opportunity to be in a new arena for the 2015 season. And construction costs are rising, as we have feared they would. These and other factors create a real and unavoidable urgency to get something done.

As we have exhausted our rights to extend the closing date on the land needed for the downtown arena, we must make a very significant investment by no later than October 31, 2011 to keep the project alive. This would be in addition to the more than $25 million we have invested since the City asked us to lead this project more than three years ago, in the spring of 2008. To be absolutely clear, the Katz Group remains firmly committed to getting a deal done with the City. Under the May 18 Agreement Framework, Daryl Katz is to invest $100 million into the arena, which the City would own, and to contribute a further $125 million from ticket sales, the proceeds from which would otherwise go to the Katz Group. In addition, subject to commercial viability, he intends to invest at least an additional $100 million in the private sector development around the arena, and to have the Oilers sign a location agreement that will keep the the team in Edmonton for 35 years. Added to the value of the team itself, this represents a total commitment to this project and the City of Edmonton of more than $525 million.

This is significantly greater than the commitments made by owners of NHL franchises operating in comparable or even larger markets that are much better able than Edmonton to sustain an NHL franchise. NHL Commissioner Gary Bettman has called Daryl Katz’s proposed investment in this case “unprecedented”.

This project has enormous potential to transform our city and create jobs, opportunity and other benefits for the entire region – and to ensure the Oilers’ long-term sustainability in Edmonton. By City Administration’s own estimate, a new downtown arena can be the driver for $1.2 billion in new municipal revenues that the City could use to fund a host of exciting civic projects.

The challenge is that the City has not yet been able to resolve certain fundamental elements of the Agreement Framework. These include closing a $100 million funding gap and obtaining a noncompete agreement from Northlands, which we have always understood to be the City’s responsibility and without which the new arena is not economically viable. We are seeking fair and reasonable solutions to these issues so that we can continue to move this project forward. It has been more than three years since the Mayor’s Leadership Committee called a new downtown arena “Edmonton’s greatest opportunity”. We have seen what has been accomplished since that time in Winnipeg, where government support was key to bringing the NHL back to that city; in Quebec City, where two orders of government committed $400 million in public funding towards a new arena to attract the NHL; and with the publicly-funded $500 million refurbishment of BC Place in Vancouver. We have every confidence Edmonton can realize a similar opportunity – especially given Daryl Katz’s proposal and the considerable public support that exists for the project.

We have great respect for the City’s process and its need to achieve an agreement that is fair for all concerned. But ultimately this is not just a debate over a funding model – it is a question of what kind of city Edmonton wants to become.